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Value based management

Galenica has an integrated value-based management concept in place that derived from an economic value added (EVA) approach. It is based on the understanding that in the interest of shareholders and other important groups of stakeholders, Galenica will strive to achieve a long-term investment return which exceeds the weighted average cost of capital (WACC). Targets, plans, performance measurement and management compensation are aligned to increase the enterprise value.

Invested capital

Invested capital corresponds to current and fixed operating assets less cash and cash equivalents and non-interest-bearing current liabilities. In the following, invested capital is calculated indirectly via equity and net debt.

Invested capital

in thousand CHF

2021

2020

Shareholders' equity adjusted

1,206,210

1,110,081

Net debt adjusted

258,206

353,741

Deferred tax assets 1)

–73

–518

Deferred tax liabilities 1)

49,483

49,638

Invested capital

1,513,826

1,512,942

 

 

 

Average invested capital

1,513,384

1,465,070

1) Without deferred taxes due to IAS 19 and IFRS 16 as already taken into account in shareholders' equity adjusted

Net operating profit after tax (NOPAT) and return on invested capital (ROIC)

Net operating profit after tax (NOPAT) is the profit before interest and after depreciation, amortisation and taxes. It is calculated from the operating result (EBIT adjusted) less calculatory income taxes.

Return on invested capital (ROIC) is calculated as NOPAT divided by the average of invested capital. This measure of performance integrates both measures of profitability and measures of capital efficiency.

Net operating profit after tax (NOPAT) and return on invested capital (ROIC)

in thousand CHF

2021

2020

EBIT adjusted

213,131

168,556

Net financial income from financial assets

633

724

Net operating profit before taxes

213,764

169,280

Calculatory tax rate (2021: 18% / 2020: 20%)

–38,478

–33,856

Net operating profit after taxes (NOPAT)

175,286

135,424

 

 

 

Return on invested capital (ROIC) 1)

11.6%

9.2%

1) Calculated as NOPAT in % of average invested capital

Galenica economic profit (GEP)

The most important key figure in Galenica's value-based management concept is the Galenica economic profit (GEP). The GEP illustrates the result of the Galenica Group after consideration of the cost of capital. GEP is a measure designed to reflect the principles of value-based management derived from an economic value added (EVA) approach. GEP is calculated as the NOPAT less the WACC over the average invested capital.

Galenica economic profit (GEP)

in thousand CHF

2021

2020

Net operating profit after taxes (NOPAT)

175,286

135,424

Cost of capital 1)

–94,587

–91,567

Galenica economic profit (GEP)

80,700

43,857

1) Calculated as average invested capital multiplied with WACC (weighted average cost of capital) of 6.25 %

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